Momentum gained on petition to reduce VAT to 10%

17-Mar-2023 - Last updated on 17-Mar-2023 at 10:12 GMT

Spring Budget: No action on VAT was taken by Chancellor Jeremy Hunt (credit: UK Parliament 2023)

More than 12,000 people have signed an official parliament petition to reduce the VAT rate on hospitality businesses to 10%.

The current rate is an eye-popping 20% during what is arguably the toughest period pubs and bars have ever faced.

The petition, which can be seen and signed by clicking here, has set out why the sector needs the fiscal help and shows how it could assist the wider industry if extended further.

The move comes after Chancellor of the Exchequer Jeremy Hunt gave his Spring Budget on Wednesday (15 March) but offered scant help to the beleaguered on-trade with no mention of cutting VAT, the long-awaited reform for business rates nor help with soaring energy costs.

The petition reads: “Reduce the VAT on hospitality to 10% from the current rate of 20% to allow hospitality to survive the storm – or risk losing a large proportion of the industry to it.”

Disproportional system

It continued: “The current tax system is disproportional and should be changed alongside changes in tax on supermarkets and online sales.

“As an industry we face unprecedented hurdles. Wages have increased 20%; food prices have risen by 8.5%; utilities have doubled; rates are soon to rise; and we have higher debts payments coming out of the pandemic.

“This presents a perfect storm of costs that just can’t be absorbed. We must reduce VAT to 10% to help us weather this unprecedented storm.”

The petition states the 10% VAT rate should also be extended to hot food, soft drinks, hot drink, events and door tickets, accommodation and attractions.

Sector leaders voiced their disappointment with the Budget shortly after its conclusion with some mentioning a need to reduce VAT.

Unequivocal message

Scottish Licensed Trade Association (SLTA) managing director Colin Wilkinson said: “If the Chancellor were to reduce VAT for hospitality, he would be sending out a clear and unequivocal message that he recognises the importance of the sector to the economy.

“We need to see a host of urgent measures to help businesses, including a reduction in the rate of VAT and lower business rates.”

Meanwhile BrewDog CEO James Watt called for a year-long VAT holiday for the industry.

The Government is obliged to respond to petitions that garner more than 10,000 signatures and considers them for a parliamentary debate if they reach 100,000 signatures.

The deadline for signing the petition is 7 May 2023.